Rebuild Cost Assessment

With fewer than 1 in 10 Commercial properties insured for the correct amount, there is a strong chance that your commercial property is over or under insured.

Rebuild Cost Assessment

The implications of not having the correct sum insured can be extremely costly. There are all kinds of reasons why your building may not be covered for the correct amount. For example, many property owners insure for the "Market Value" of their property, which is incorrect. Properties should always be insured for the "Rebuild/Reinstatement Value".

So what are the implications?

It's true that it is better to be over-insured than under-insured. However, if your property is over-insured, you could be paying too much for your commercial buildings cover. The Rebuild/Reinstatement value will have a direct impact on the premium you pay. Over the years this unnecessary expense can significantly add up.

Under-insurance can have far more severe consequences. This is because many insurers apply the “Average Clause”:

Let’s say your property is insured for £1,000,000, but the actual cost to rebuild should be £2,000,000. Any insurance claim you make for the property could be reduced by 50%. In this example you would need to find £1,000,000 to cover the cost of rebuilding your property following a major incident, such as a fire that completely destroys your building. For some, a reduced claim payment as a result of underinsurance has meant they've gone out of business. Around two thirds of commercial properties that are underinsured and are normally covered for just two thirds of their correct rebuild cost. Its important to ensure your property isn't one of them.

So what can you do?

The simple solution is to insure for the correct amount. Normally, this involves finding a trusted expert who visits your property to complete a professional assessment. This can be both time-consuming and expensive. However, our partners at offer a low-cost online service. From just £130.00 (normally £160), incl VAT, they can provide you with a comprehensive Rebuild Cost Assessment (RCA) report without ever having to visit your premises. They also offer on-site assessments as a premium service if the initial survey is too complex in to be done online.

Their reports advise you of the rebuild cost of your property and guides you on what action to take. As they are a 'Regulated by RICS' (Royal Institution of Chartered Surveyors) organisation, nearly all of the UK's major insurers will remove the Average Clause from your policy as long as you insure for the amount they recommend in their RCA report. Should a claim occur, you will also have a RICS based report immediately to hand, which will put you in an extremely strong position should you ever face a disputed insurance claim.

Its recommended that you undertake a Rebuild Cost Assessment every 3 years. When was your last assessment?

What happens next?

If you want to check your building is correctly covered, please get in touch with your account manager to arrange a Rebuild Cost Assessment.